Editor’s Note: Mark Muro, senior fellow and policy director, is the paper’s lead contributor from the Metropolitan Policy Program at Brookings. Brookings Mountain West and SRI International also contributed.
Nevada stands at a crossroads, yet it appears ready to remap its future.
Silver Staters sense that the current economic slump has not been just a temporary reversal but a challenge to the state’s traditional growth model—one that has revealed an economy over-dependent on consumption sectors, prone to booms and busts, and too little invested in innovation and economic diversification. And yet, for all that Nevadans have been early to recognize that the current slump will beget, in some places, innovation and renewal, and in other places erosion—and so requires action.
To that end, this paper draws on an intense five-month inquiry that sought to define the nature of the economic challenges the state and its major regions face; identify industries and industry clusters that have the highest potential for expansion as part of an economic diversification effort; and suggest policy options that will enable the state, its regions, and the private sector to work more effectively to build a more unified, regionally vibrant, and diversified Nevada.
Nevada possesses fundamental economic assets along with serious challenges as it seeks to build its next economy. A systematic SWOT (strengths, weaknesses, opportunities, and threats) assessment reveals considerable assets and opportunities that the state can leverage as it seeks to renew its core industries and diversify by catalyzing growth in emerging ones. This assessment confirms that Nevada’s core strength for economic development has been and will remain its overall business-friendly environment, including low taxes, relatively low costs, light regulation, and ease of business start-up/permitting. Key challenges include: spotty economic planning and cooperation; a weak innovation and technology commercialization enterprise; and substantial workforce skills shortfalls.
Seven major industries and some 30 narrower target opportunities—distributed in varying mixes in the state’s regions—hold out plausible potential for economic growth and diversification for Nevada. Building on the SWOT analysis and stakeholder consultation aimed at understanding Nevada’s statewide goals, the Brookings-SRI study team conducted an empirically grounded analysis aimed at identifying industries and sub-industries that have the highest potential to restore growth and jobs, spawn innovation in core or emerging sectors, or drive economic diversification. These industries and target opportunities include:
- Tourism, Gaming, and Entertainment
- Health and Medical Services
- Business IT Ecosystems
- Clean Energy
- Mining, Materials, and Manufacturing
- Logistics and Operations
- Aerospace and Defense
To leverage the state’s opportunities, meanwhile, Nevada needs to upgrade its diffuse economic development system so that the state at once leads more vigorously, empowers its regions more fully, and also sets a state-wide platform for new growth. In this vein, this report calls for the state to unify, regionalize, and diversify as follows:
- Unify: Install an operating system for 21st century economic development
- Regionalize: Support smart sector strategies in the regions
- Diversify: Set a platform for higher-value growth through innovation and global engagement
This report assumes wholeheartedly that renewal and diversification through innovation is possible in Nevada. To be sure, there is much work to be done. A strong state economic development plan needs to be crafted and followed, requiring hard decisions and painstaking execution. Yet, while this work might seem like a tough task at a difficult time, the study team is confident that the moment is right. Focused by challenge, Nevadans seem ready to reach for a new future.
If we [the United States] have less access to these [international] markets, we're going to have fewer opportunities to create jobs in the export sector. Also, if we decide to tax imports, there are a lot of people in this country dependent on imports and we're also going to see people lose their jobs.